Stress tests due 23 July
FRENCH finance minister Christine Lagarde confirmed yesterday that the results of stress tests on European banks will be published on 23 July, in an attempt to boost confidence in the sector’s ability to weather further economic and regulatory shocks.
The scope of the tests has recently been widened to cover around 100 of Europe’s banks, four times the number which were originally marked out for regulatory scrutiny.
“You will soon be seeing the number of banks that will be submitted to the stress test, you will have better understanding of the exact criteria we apply and of how heavily we stress the system, and then later, on July 23rd, the result of the stress test will be issued,” Lagarde said on the sidelines of a conference in Provence.
She also moved to calm fears that the sector would struggle to cope in the face of tighter capital requirements, extra taxes and additional regulation, adding that “banks in Europe are solid and healthy”.
Simulated tests carried out by analysts have shown that KBC, National Bank of Greece, Commerzbank, Credit Agricole and Dexia would fare worse than their major rivals, but without falling to danger levels.
However, while some analysts say the tests should restore confidence in the sector and lead to a recapitalisation of weaker banks, officials have come under fire from others sceptical about the initiative. Some argue that the exact criteria of the sovereign stress needs to be disclosed if the tests are to convince the market.
One of the keenest concerns for the market is the extent to which bank balance sheets have been knocked by stricken Greek, Spanish and Portuguese sovereign bonds.